Examination of Witnesses (Questions 360
WEDNESDAY 31 OCTOBER 2001
360. Do you normally have a percentage?
(Mr Bloom) No, it is done on an hours and rates basis.
It is not done on a percentage.
361. On an hours and rates basis. What would
be the normal rate per hour, since we are enquiring into this
matter, for someone of your seniority?
(Mr Bloom) The average for my seniority or the average
for the entire team?
362. Let us start with you and also have an
average for the lot?
(Mr Bloom) Okay. For the lot it would be around about
£250 an hour. For me, about £450 an hour.
Chairman: Oh. That is helpful.
363. Given what you have said about the length
of time in terms of the company being in administration, how are
you making sure and ensuring that the management attention is
not being diverted away from the day to day business of running
(Mr Bloom) We have devolved day to day management
of the railway to the management team. We have not made any changes
to the management team. If you like, the administration is an
overlay with the additional responsibility of ensuring that the
transfer takes place.
364. What you said earlier suggests that could
be for some significant time. Mr Marshall, as I understand it,
leaves in six months.
(Mr Bloom) Mr Marshall handed in his notice on 8th
October, I think it was, and agreed to serve the six months' notice.
Obviously one of the things that we have to think about over the
course of the next couple of months is succession for Mr Marshall,
you are right.
365. Given what the Chairman has already asked
in terms of the share pay out, what pay out will be made to the
Chief Executive when he leaves, given that there was quite considerable
public concern when his predecessor left the company? Have you
any control over that?
(Mr Bloom) He has a contract with the company, in
fact I suspect he has a contract with both companies.
366. Does that company still exist?
(Mr Bloom) Yes.
(Mr Marshall) Yes.
(Mr Bloom) The company does not cease to exist because
367. The freedom is there of that company to
make a pay out but the public would not see it as something that
(Mr Harding) Could I clarify? Mr Marshall has given
notice he will work his period of notice. It is not expected he
will be paid any compensation at the end of that period. He will
leave on 7th April.
368. Can I then just finish by asking you a
question in terms of the West Coast Main Line and in particular
where it crosses the border. Just exactly what are you doing in
terms of the division that there is at Government level in terms
of the responsibility for the railway in making sure that the
funding is going to be there for the upgrading of the West Coast
Main Line north of the border?
(Mr Rollings) Can I perhaps answer that. I have been
looking at the major projects, including West Coast Main Line.
We have been reviewing and assessing the major projects and we
are in the process of so doing. Clearly there are issues as regards
scarcity of resources and we are looking at costs and time in
terms of achieving what is set out for the projects. At this time
the funding issues have been referred to, I think, by the Secretary
of State as perhaps being wrapped up in SPVs and those sort of
areas but primarily
369. Special Purpose Vehicles.
(Mr Rollings) I do apologise. Primarily the funding
will be through Government, at the moment, and the recoveries
from the track access charges.
370. Is that Government south of the border
or Government in Edinburgh or a bit of both?
(Mr Rollings) That is a very good question.
371. I know it is a good question.
(Mr Rollings) I am not really able to answer at this
time as to how the division is made between the public purse north
or south of the border.
372. If I can address the first question to
Mr Bloom. The model that the Government is posing, is it based
on any existing model in any other country?
(Mr Bloom) We have not had a firm proposal put to
us by the Government. We have seen what everybody has seen in
the press about the proposed model going forward, the company
limited by guarantee, the not for profit organisation. As I understand
it, it may be based on the Welsh Water model in some way or form
but no formal proposal has been put forward so I cannot really
comment in any detail.
373. How do you think the decision will be taken
ultimately? Will it be the Government?
(Mr Bloom) As I mentioned in the introduction, it
is for the Secretary of State ultimately to decide where he grants
the licence obviously with also the agreement of the Strategic
Rail Authority and the Office of the Rail Regulator. What the
Secretary of State has announced is a preparedness to listen to
proposals that are put forward, to look at those and then make
a decision on where the licence should be granted.
374. Could I turn to Railtrack and ask, the
line I am most familiar with is the East Coast Main Line. I understand
the improvements up to 2003 were agreed by Railtrack and by the
SRA, is that a proper understanding?
(Mr Marshall) Yes, I think you are referring to phase
one of the East Coast Main Line, the Leeds First Project and so
on. That was initiated, in fact, and funded by Railtrack off its
own bat and is due for completion then, as you indicated, because
we wanted to get on with it. That was privately funded by Railtrack.
375. Are you aware that the Strategic Rail Authority
have retained consultants to look at a potentially totally new
line on the East Coast from London to Edinburgh? If you are aware
of that or not aware of that, what would the implications be for
the projected improvements to the existing East Coast Main Line?
(Mr Marshall) The reality now is clearly that the
Strategic Rail Authority, to the extent that the Government permits
it, is in the driving seat for determining what upgrades, if any,
proceed beyond phase one which is already committed, £260
million scheme, and will be completed. I am aware indeed that
they have been looking at a number of options on the East Coast
Main Line and have got consultants involved and they are working
very closely with our own people. That work is underway. It is
unclear where that will lead, not least given the priorities for
funding upgrades and the uncertainty, if the assumption that all
new upgrades will be on Special Purpose Vehicles, as to the timing
and, indeed, the nature of how those schemes will go forward.
376. Can I just be blunt. Is it fair to ask
people to make a major investment in an existing line for a two
year extension when that whole line may be brought into question
by a competing line within five or ten years?
(Mr Marshall) I will be equally blunt in response.
A strategy is needed for where upgrades are going to be done and
how and by whom before anybody would be particularly wise to put
Chairman: Mr Stevenson, would you like to be
377. Yes, I will try. To the administrators,
please. I understood you to say that you had three objectives:
transfer as a going concern, day to day management of rail network
and developed interest for the future of the company that may
(Mr Bloom) One is really substituting
378. Given that the day to day management you
have devolved to the present management of Railtrack, as I understand
it, is it fair to assume than that your primary objective is to
develop interest in the disposal of this company as a going concern?
If so, what are the elements that would construct a company and
make it a going concern?
(Mr Bloom) The first part of the question, which is
what we are doing on the day to day, whilst we have devolved large
amounts of the responsibility to the board of directors there
are clearly quite a lot of things that we need to do and there
are a lot of issues that arise from the administration itself.
The way that we have effectively divided the work is that the
administration team deals with those issues that have arisen as
a result of administration itself.
379. Who is running Railtrack?
(Mr Bloom) The board of directors with us dealing
with issues that are arising from any of the administration side.